On Wednesday, I had a long discussion over Zoom with the eminent Gary Shilling, courtesy of FRA. There is much we agree on but as my readers are aware, my view on a coming deflationary spiral is measured as a low probability outcome of the current financial and economic situation. If deflation were to take hold it would be deemed a major failure of FEDERAL RESERVE policy aided and abetted by 535 fools on Capitol Hill. Before getting to the PODCAST, I offer up this advice on this week of major macro-economic importance (and NO, NOT THE U.S. ELECTION). There were three central bank meetings this week: The Reserve Bank of Australia; the Bank of England; and the Fed.
Posts Tagged ‘British pound’
Notes From Underground: Yra and Gary Talk Deflation
November 6, 2020Notes From Underground: The BOJ Leading Off With the Fed On Deck
July 29, 2019On Monday night, the Bank of japan announces its policy intentions and consensus is for no change. The ECB remained on hold with promises of more liquidity to come so it is doubtful that Governor Kuroda would do anything ahead of the FED.
Notes From Underground: A Hard Brexit Is Going To Fall?
February 10, 2019The economic fallout from a “hard” Brexit has been debated in the media for the last few months. When I say “hard Brexit,” I mean that the U.K. leaves the European Union without any deal about trade rules, movement of people or any other binding treaty rules concerning the contemporary EU/U.K. relationship. I have refrained from forecasting outcomes because they are beyond the scope of economic analysis since it requires using models built of questionable assumptions. The British have a long history of economic intercourse intertwined with the lines of commerce from its empire.
Notes From Underground: Narrow-Minded Hypocrites, All I Want Is the Truth
December 13, 2018Gimme some truth. That is what John Lennon craved back in 1971. In 2018, it seems that investors and traders crave the same thing:
I’m sick and tired of hearing things
From uptight, short-sighted,narrow-minded hypocrits
All I want is the truth, just Give me some truth
I’ve had enough of reading things
By neurotic, psychotic, pig-headed politicians
No short-haired, yellow-bellied, son of tricky dicky
Is going to mother hubbard soft soap me
With a pocketful of hope
Money for dope, money for rope
Notes From Underground: Deep Discourse With Anthony Crudele (and Futures Radio)
December 10, 2018On December 6, I had the pleasure of talking with Anthony Crudele at Futures Radio. Anthony and I covered Russia, yield curves, gold/currencies and the Chinese tariff situation. Enjoy the discussion, be it on the tread mill, stationary bike or sipping your favorite libation. My favorite drink is now Wild Irish Rose sent to me by the great trader and humorist P. Lynch. And please, keep the comments coming as powerful questions lead to quality discourse and potential profitable trades.
Notes From Underground: Central Bank Palooza
July 30, 2018Coming on the heels of my first Kenny Chesney concert I am viewing the synchronicity of central banks as a reflection of the rhythms of global financial repression. Last Thursday, the ECB issued its last statement before the summer recess, while this week we have the Bank of Japan tonight, the FED on Wednesday and the Bank of England on Thursday.
Notes From Underground: Quick Note on the BOE and Friday’s Jobs Report
November 2, 2017Today, the BOE raised interest rates (as expected). But the market deemed it to be dovish and the EUR/GBP rallied 2 percent as the British pound tumbled and the euro strengthened versus the pound and dollar. On Wednesday I cautioned that the EUR/GBP failed to hold below its 200-day moving average and this provided a good technical level. As expected, the FOOTSIE index rallied more than 1 percent as investors appreciated a weaker POUND as beneficial to British corporations regardless of Brexit. The initial release of the statement revealed a 7-2 vote, which on first read was not the expected 6-3 vote so could have been a bit hawkish. But the eight paragraph statement clarified the soft-side of Governor Carney:
Notes From Underground: The More Things Stay the Same, the More the Headlines Change
September 14, 2017The BOE held true to consensus and kept rates unchanged and maintained its balance sheet at 435 billion pounds, with the votes were exactly the same as the August meeting. The POUND fell on the initial headlines but the algos reversed as it was reported that there MAY be a need to raise rates due to the lessening slack in the economy. Governor Carney is reading from the Mario Draghi book, “Rules For Central Bankers.” He cited Brexit as the cause of a supply shortage because of reduced investment into the U.K. Wow! This is nonsense as stagnant wages are limiting domestic demand but Carney insists the negative fallout is constraining supply. With interest rates at record lows British firms could borrow all the cash they need to finance expansion. Carney needs BREXIT as the cover for his massive error. Remember when he panicked and cut rates following the BREXIT vote?
Notes From Underground: The Bank of England Reveals Its Decision
September 13, 2017Thursday, the Bank of England will reveal its most recent interest rate decision. The consensus is for the BOE to leave its overnight interest rate at 0.25%. There is interest in this meeting because the British inflation data has risen and is now above Governor Mark Carney’s desired target. The most recent inflation data released on Tuesday sent GILT yields higher and put a strong bid to the British pound, pushing it to levels against the U.S. dollar unseen since the BREXIT vote. The EURO even lost ground to the British currency as the market NOW ASSUMES that the BOE will have to move to raise rates in response to rising price pressures.
Notes From Underground: Unemployment Friday, the Data On Which We’re Dependent?
August 3, 2017The first Friday of August brings the BLS jobs report. Does it matter for the markets?In my opinion, not unless this number is above 300,000 or the rate falls below 4.1%. Average hourly earnings (AHE) is the critical variable of the economic story. The FOMC and others have been adamant that it is the fear of wage inflation that drives the discussion about either an interest rate increase or a “relatively soon” beginning of quantitative tightening. For our preparation, the market estimate is for a nonfarm payroll number of 170,000, an unemployment rate of 4.4% and, more importantly, a 0.3% increase in AHE. As an aside, a number that Art Cashin likes is the hours worked per week, which is expected to remain at 34.5. The hours worked are examined because even if new jobs aren’t created a strong economy will get employers to seek longer hours for current workers.